The Compound
What is the Dave Ramsey Portfolio?
10/22/2025, 5:31:27 PM
Economic Summary
- The S&P 500 returned roughly +1% from 2016–2020 and about +92% from 2021–present; ~150 stocks (~30%) outperformed in 2016–2020, ~241 (~50%) outperformed in 2021–present, and only about 41 stocks outperformed in both five-year windows (notable names include MSFT, GOOGL, NVDA, AVGO, META).
- Persistence among active managers is very low: the podcast cites a Persistence Scorecard showing only ~2% of large-cap funds stayed in the top half over the next five years and top-quartile funds rarely maintained their ranking across subsequent periods, implying limited odds of consistent active outperformance.
- The 4% rule (attributed to Bill Bangan in the transcript) means withdrawing a fixed percent of initial portfolio value then adjusting annually for inflation; the book 'A Richer Retirement' explores variations and success probabilities using long historical data back to 1926.
- Diversification outcomes are decade-dependent: the US led many recent decades but lagged in others (e.g., 2000s was a lost decade for the S&P), so international and asset-class diversification can materially reduce sequence-of-returns risk over multi-decade horizons.
- For most investors, buy-and-hold and broad indexing beat frequent trading or active stock-picking: both professional managers and many retail investors struggle to consistently outperform over long horizons.
Bullish
- MSFT, GOOGL, NVDA, AVGO, META repeatedly outperformed the S&P across multiple five-year windows.
- Some non-tech names (WMT, DECK, CAT, HLT, TEVA) showed durable outperformance unexpectedly.
- A simple S&P 500 allocation has recently beaten many more complex diversified portfolios.
Bearish
No bearish cases captured.
Bullish tickers
MSFTGOOGLNVDAAVGOMETAWMTDECKCATHLTTEVA
MSFT
Bullish
Listed among the handful of stocks that outperformed the S&P across both five-year windows.
Bearish
Past outperformance may not persist; concentration and cyclical shifts can reverse returns.
GOOGL
Bullish
Consistent multi-period outperformance; named as a persistent winner across windows.
Bearish
Regulatory, competitive, or cycle risks could hinder future returns despite past strength.
NVDA
Bullish
One of the standout outperforms across both five-year periods, driven by AI cycle strength.
Bearish
Highly cyclical and sentiment-driven; elevated expectations may be vulnerable to mean reversion.
AVGO
Bullish
Included among stocks that outperformed the S&P in both sampled five-year periods.
Bearish
Semiconductor-related cyclicality and consolidation risks could pressure returns.
META
Bullish
Named as a persistent outperformer across the two five-year windows discussed.
Bearish
Ad-driven revenue sensitivity and regulatory scrutiny could weigh on future growth.
WMT
Bullish
Surprisingly durable outperformance across both five-year periods noted in the episode.
Bearish
Retail competition and margin pressure could limit upside despite past resilience.
DECK
Bullish
Deckers (DECK) appeared on both outperformance lists, a notable multi-period winner.
Bearish
Brand- and consumer-cycle sensitivity could create volatility after past strong runs.
CAT
Bullish
Caterpillar was a surprising name that outperformed in both five-year windows.
Bearish
Commodity and industrial cycle exposure creates cyclical risk to performance.
HLT
Bullish
Hilton appeared as a surprising multi-period outperformer despite early COVID weakness.
Bearish
Hospitality exposure is sensitive to economic downturns and shocks like pandemics.
TEVA
Bullish
Teva was listed among names that outperformed the S&P in both sample periods.
Bearish
Pharma-specific regulatory, patent, and litigation risks can constrain returns.
People mentioned
Ben CarlsonDuncanColemanBill BanganGarethNickDave RamseyDanJC